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Abercrombie & Fitch Bias Case Is Settled

Abercrombie & Fitch, one of the nation's trendiest retailers, settled race and sex discrimination lawsuits yesterday, agreeing to alter its well-known collegiate, all-American -- and largely white -- image by adding more blacks, Hispanics and Asians to its marketing materials.

After a federal judge in San Francisco approved the class-action settlement yesterday, the two sides announced an agreement that calls for Abercrombie & Fitch to pay $40 million to several thousand minority and female plaintiffs. Abercrombie also agreed to hire 25 diversity recruiters and a vice president for diversity and to pursue benchmarks so that its hiring and promotion of minorities and women reflect its applicant pool.

In an unusual step, the settlement calls for Abercrombie to increase diversity not just in hiring and promotions, but also in its advertisements and catalogs, which have long featured models who were overwhelmingly white and who seemed to have stepped off the football field or out of fraternities or sororities. Plaintiffs' lawyers said they insisted that the company agree to add more diversity to its marketing materials so as not to discourage minorities from applying for jobs.

In another unusual move, the settlement requires Abercrombie to stop focusing on predominantly white fraternities and sororities in its recruitment. Many Abercrombie workers have said that company employees were often told to go to college campuses and to urge good-looking fraternity and sorority members to apply for jobs.

When Abercrombie was sued in June 2003, several Hispanic, black and Asian plaintiffs complained that when they applied for jobs, they were steered not to sales positions out front, but to low-visibility, back-of-the-store jobs, stocking and cleaning up.

"Abercrombie had a back-of-the-bus mentality," said Kimberly West-Faulcon, Western regional counsel for the NAACP Legal Defense and Education Fund. "Now instead of hiring them in the back of the store, they will have diversity recruiters. It sends a message to young people that we're moving past this kind of thing."

Bill Lann Lee, the plaintiffs' lead lawyer and former director of the Justice Department's civil rights division, said Abercrombie had refused to hire many minority students who had impressive work and school records. He added that the percentages of minority and women managers at Abercrombie were far below industry averages.

"We're talking about discrimination being visited on some of the best and the brightest within their community," Mr. Lee said.

He applauded the settlement, approved yesterday by Judge Susan Illston of Federal District Court. "The import of this settlement is that a major American company has stepped forward and become a model," Mr. Lee said.

Abercrombie, which did not admit guilt, agreed to hire a monitor, to provide diversity training to all managers who do hiring and to revise performance evaluations for managers, making progress in diversity goals a factor in bonuses and compensation. The settlement also called for $7.2 million in lawyers' fees.

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In a statement, Mike Jeffries, Abercrombie's chairman, said: "We have, and always have had, no tolerance for discrimination. We decided to settle this suit because we felt that a long, drawn-out dispute would have been harmful to the company and distracting to management."

Several industry analysts said the settlement would help Abercrombie's marketing. The company has 700 stores and 22,000 employees and had $1.7 billion in sales last year.

"Their profile, their image is going to evolve," said Robin S. Murchison, a retail analyst with Jefferies & Company. "It will still be the cool kids. You can walk onto any Ivy League campus and there's a lot more going on than Waspy-looking guys and girls. I think they'll tap into that. I actually think it will work to their advantage."

In an interview yesterday, Carla Grubb, a 21-year-old black plaintiff who is a student at California State University at Bakersfield, said that after she applied for a sales job at an Abercrombie store, she was hired to dust, clean windows and vacuum.

"I was always doing cleaning -- they said I was a good window washer," said Ms. Grubb, who later landed a job elsewhere repairing computers. "I should have received the same treatment as everybody else. It made me feel bad. No one should be judged by the color of their skin."

Eduardo Gonzalez, the lead plaintiff and a senior chemistry major at Stanford University, said that when he applied to an Abercrombie store in Santa Clara, Calif., managers urged him to apply for the overnight stocking crew. Noting that his application was rejected, he said that when a store manager interviewed him and 13 other applicants at once, the manager overwhelmingly favored the two white applicants.

"I love this settlement," Mr. Gonzalez said. "It's a landmark thing for an American icon. They were portraying this image that all-American is all white. That's not the case."

Thomas Lennox, Abercrombie's director of communications, said that with the settlement, "we're bringing this issue to closure as well as implementing policies and practices that will ensure greater diversity throughout our organization."

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A version of this article appears in print on November 17, 2004, on Page A00016 of the National edition with the headline: Abercrombie & Fitch Bias Case Is Settled. Order Reprints|Today's Paper|Subscribe